Disk Supply Issues Growing as Nearline HDD Sales Remain Strong

Disk supply has been a point of concern for a couple years now, and despite stalling overall HDD volumes, disk demand is projected to rise. The nearline HDD market is the main reason behind surging volumes given the high disk count per nearline HDD. Currently, all nearline HDDs are aluminum based, and in our view, this is not expected to change through the forecast period. With that, the focus has centered on each aluminum-specific process from aluminum blanking to nickel plate polish for which there has been very minimal investment in recent years resulting in stagnant production capacities. Based on our current forecast, there will be a nickel plate, nickel plate polish, and G-sub supply issues as early as 2016.